VERDICT VIEW: Shell ups the ante in a bid to drive loyalty

Send to a colleague

VERDICT VIEW

Thursday, May 31, 2012

Ashima Jain, Senior Retail Analyst at Verdict Research:

Shell ups the ante in a bid to drive loyalty

Shell’s recently announced plans to introduce attendant service at its forecourts in the UK points toward a potential game-changer in the fuel retail sector. While motorists have become used to filling up on their own, a free attendant service is something that they could easily get used to, given the added convenience that it offers.

With rises in pump prices and fuel duties over the years, car owners have become highly price-conscious instead of brand loyal, and have been switching to lower-priced supermarkets in a bid to cut their overall fuel spend. Frequent price wars and other fuel promotions among the grocers have not only served to generate interest in supermarket-branded fuel but have also brought the convenience attribute of grocery shopping and refueling at the same location to the fore. As a result, supermarkets have quickly gained share of the market over oil companies, and account for 38-40% of total fuel sold in theUK.

In such a marketplace, it has become a key challenge for major oil companies to drive loyalty with their standard mix of fuel, shop, and car wash. In a bid to defend their turf, fuel retailers need to provide value-added services that give them a key competitive advantage.

Shell’s move to reintroduce attendant service is a smart choice as it will remind drivers of the long-forgotten convenience and ease of getting their car filled by an attendant, giving it a key advantage over the competition. This will also reinstate the “service” attribute of a service station, challenging the popular notion that self-service is the consumer’s preferred choice at all times. The service will initially be introduced at 300 forecourts by the end of summer, and will be rolled-out to 600 sites by mid-2013. The attendants will be present for six to eight hours during the day, seven days a week, covering peak hours.

Customers will be able to enter the forecourt shop while their car tanks are being filled and pick up supplies for the road before paying for the fuel and convenience products at the till. This will translate into a quick turnaround at the forecourt, delivering the prized attribute of convenience. For some customers, this may translate into freed up time for top-up shopping and snacking and it will encourage them to spend more on shop products.

The service is likely to be highly valued by parents with kids, as well as female and older drivers, who will find that their refueling trips become much easier and quicker. The attendants will also provide other basic services including checking tire pressure and oil levels, something that will resonate with drivers of all age groups and experience.

While Shell’s attendant service is a good way for the fuel retailer to provide better service to its customers, the 24-hour convenience of self-service pumps with pay-at-pump facilities cannot be discounted. Shell is trialing similar attendant services in Scandinavia where fully unmanned service stations are more prevalent compared to theUK.

These moves indicate a polarization of service, where retailers have to choose between two opposite ends of the service continuum – full-service versus no-frills fuel dispensing – in order to appease the varying needs of their customer base. A decision to invest in a costly and labor-intensive service that entails the training and development of staff should be measured against the traffic flow and the customer profile of the site.

This initiative by Shell will no doubt help in differentiating its service proposition in the minds of British motorists, while forcing other fuel retailers to answer the difficult question of what level of service they should provide to their customers.

ENDS

For further information and/or an interview with Ashima Jain or the team of Verdict analysts, please contact: kirstin.stocker@informa.com

- Ends -

Notes to editors

Further Information

About Verdict

Verdict Research is the leading authority on UK and European retail markets. Our research publications, consultancy services and news bulletins offer unparalleled analysis on a large variety of retail sectors, issues, geographies and demographics.

Verdict is part of the Datamonitor Group.

About Datamonitor

Datamonitor is a leading provider of online database and analysis services for key industry sectors. We help our clients, 5000 of the world's leading companies, to address complex strategic issues. Through our proprietary databases and wealth of expertise, we provide clients with unbiased expert analysis and in-depth forecasts for seven industry sectors: Automotive, Consumer Packaged Goods, Energy, Financial Services, Pharmaceuticals and Healthcare, Technology, Transport and Logistics.